Seller Concessions Calculator
See how seller-paid closing costs and concessions affect your cash at closing and monthly mortgage payment when buying a home.
Free Seller Concessions Calculator
Seller concessions are credits the home seller gives you at closing to cover some of your closing costs. Our free seller concessions calculator shows how much cash you save at closing, your resulting loan amount, and your monthly mortgage payment when concessions are applied.
How to Use the Seller Concessions Calculator
- Home price: The agreed-upon purchase price.
- Down payment (%): The percent of the price you pay upfront.
- Interest rate: The mortgage rate your lender quoted.
- Seller concession (%): The percent of the price the seller is crediting toward your closing costs.
- Term: The length of your mortgage.
What Can Seller Concessions Cover?
Seller concessions can typically be applied to:
- Lender origination fees and discount points
- Title insurance and title search fees
- Appraisal and inspection fees (in some cases)
- Prepaid property taxes and homeowners insurance
- A temporary mortgage buydown (3-2-1, 2-1, etc.) to lower your rate for the first few years
Worked Example: 3% Seller Concession on a $400,000 Home
Suppose you are buying a $400,000 home with 20% down ($80,000) on a 30-year loan at 6.5%. The seller agrees to a 3% concession ($12,000). Here is how it affects your cash at closing:
| Scenario | Down Payment | Seller Credit | Cash at Closing |
|---|---|---|---|
| No concession | $80,000 | $0 | $80,000 |
| 3% concession | $80,000 | $12,000 | $68,000 |
The seller concession reduces your out-of-pocket cash at closing by $12,000, but your loan amount ($320,000) and monthly payment ($2,026.74) stay the same. If you instead used the $12,000 to fund a 2-1 buydown, you would pay $1,549.32/month in year 1 and $1,736.96/month in year 2 before settling at $2,026.74 in year 3.
Maximum Seller Concessions by Loan Type
Different loan programs cap seller concessions at different percentages of the purchase price:
| Loan Type | Max Seller Concession |
|---|---|
| Conventional (25%+ down) | 9% of price |
| Conventional (10-25% down) | 6% of price |
| Conventional (under 10% down) | 3% of price |
| FHA | 6% of price |
| VA | 4% of price |
| USDA | 6% of price |
Your lender can confirm the exact limit for your loan and down payment. These caps exist to prevent inflated home prices masked by large seller credits.
Seller Concessions vs. a Lower Price
A lower purchase price reduces your loan amount and monthly payment but does nothing for your closing cash. A seller concession reduces your out-of-pocket cash at closing but leaves your loan amount and payment unchanged. If you are cash-constrained, concessions help; if you want a lower payment, negotiate the price down instead.
Seller Concessions Glossary
- Seller concession
- A credit from the seller to the buyer at closing, used to cover the buyer's closing costs and prepaid expenses. Expressed as either a percentage of the price or a flat dollar amount.
- Closing costs
- The fees and prepaid expenses due at closing on a home purchase, typically 2-5% of the loan amount. Includes lender fees, title insurance, escrow, and recording fees.
- Down payment
- The portion of the home price you pay upfront in cash. The remainder is financed. Seller concessions cannot be applied to the down payment.
- Cash at closing
- The total cash you must bring to the closing table — your down payment plus closing costs, minus any seller concession and lender credits.
- Seller-funded buydown
- Using seller concession money to pay for a temporary mortgage buydown, lowering the buyer's rate and payment for the first few years. See our buydown calculator to model this.
Frequently Asked Questions
What are seller concessions?
Seller concessions are credits the seller gives the buyer at closing to cover some of the buyer's closing costs. They are negotiated as part of the purchase offer and are commonly used to reduce the buyer's out-of-pocket cash.
How much can a seller contribute in concessions?
It depends on the loan type. Conventional loans allow 2%–9% of the purchase price depending on down payment. FHA allows up to 6%, VA up to 4%, and USDA up to 6%. Your lender can confirm the limit for your loan.
Can seller concessions be used for the down payment?
No. Seller concessions can only cover closing costs and prepaid expenses (taxes, insurance, escrow), not the down payment. The down payment must come from the buyer's own funds or an approved gift source.
Do seller concessions lower my monthly payment?
Seller concessions do not change your loan amount or rate, so they do not lower your monthly principal and interest payment. They reduce your out-of-pocket cash at closing. If the concession funds a buydown, it can lower your payment for the first few years.
Should I ask for seller concessions or a lower price?
If you are short on cash for closing, ask for concessions. If you have plenty of cash but want a lower payment, ask for a lower price. A lower price reduces your loan amount and payment; concessions reduce cash at closing.
Can seller concessions fund a mortgage buydown?
Yes. A seller-funded temporary buydown (like a 3-2-1 or 2-1 buydown) is a common use of seller concessions. The seller pays the upfront cost of the buydown at closing, lowering your rate for the first few years. Try our buydown calculator to see the impact.
Disclaimer
This calculator is an educational tool for estimating mortgage payments and savings. Results are approximations and exclude taxes, insurance, HOA, or other fees, which may increase actual payments. This is not an offer or guarantee of credit. For accurate quotes, consult a licensed loan officer.
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